THE TRUTH ABOUT BIOFUELS AND ETHANOL
Food riots in Southeast Asia. Rice rations at Wal-Mart.
Exactly what is causing food prices to suddenly
skyrocket around the world?
As one of the world's wealthiest nations, we have a
moral obligation to properly identify the factors that
have come together to create this perfect storm of
global suffering. We need to get it right, and fast.
Once viewed as an environmentally-friendly, silver
bullet alternative to fossil fuels, biofuels have
recently become "public enemy number one" in regard to
rising food prices. But what role does the growing
biofuels market really play in the current food crisis?
There are a number of factors contributing to rising
food costs. Poor harvests over the past year in
Australia, Canada, South America and Eastern Europe.
Protectionist tariff policies affecting the
rice-producing nations of South Asia. A weak dollar is
driving up the demand for U.S. exports of grains, a
dynamic exacerbated by hedge fund and pension fund
managers who are pouring unprecedented levels of
investment in grain commodities. Growing incomes and
meat-eating preferences of an emerging middle class in
countries like India and China are increasing global
demand for animal feed and the fuel required for
production and transport.
But the most significant factors driving up food prices
are ever-rising energy and transportation costs.
Fuel is a major factor in crop prices. The fuel required
to till, harvest, store and transport crops is now at
record highs. With crude oil approaching $120 per
barrel, and diesel exceeding $4.00 per gallon, natural
gas prices, in turn, have driven fertilizer prices up
another 50 percent. Altogether, worldwide agricultural
markets have sustained a whopping 115 percent increase
to bring food to our tables, just in the past year.
In the short term, worldwide investment in the promise
of biofuels probably has placed some pressure on the
price of corn in the U.S. But it is not the reason food
prices are rising around the world - nor will it be the
reason in the future.
The renewable fuel standard provisions of the 2007
Energy Act -- which were hailed by environmentalists,
Congressional leaders and the Administration as
visionary and forward-thinking -- are exactly right.
With a careful balance of incentives and mandates, the
Act encourages development of these advanced
technologies, and the biofuels industry has answered the
call: there are already 29 advanced biofuels refineries
planned or under construction.
In coming years, biotechnology will allow us to create
biofuels from non-food crops, crops that yield more per
acre, require less fertilizer and are more tolerant of
drought and other adverse conditions. These scientific
breakthroughs will only enhance the world's ability to
feed and fuel itself in a responsible and sustainable
way.
As biofuels production transitions to these second and
third generation biofuels, biotechnology will play an
essential role in providing the world with cleaner fuel
and more affordable food. The world food crisis demands
our full and immediate attention. And it deserves the
wisdom and foresight to keep these promising
technologies on track.
JAMES C. GREENWOOD
President and CEO
Biotechnology Industry Organization
Washington
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